Source: Cointelegraph Original: "{title}"

The Federal Court of Australia has supported fintech company Block Earner in an appeal, overturning a previous ruling that required the company to hold a financial services license for its now-discontinued cryptocurrency-related products.

In a ruling on April 22, the court stated that Block Earner's cryptocurrency fixed income products are neither financial products nor managed investment schemes, and do not fall under the derivatives defined by the Corporations Act. Judges David O'Callaghan, Wendy Abraham, and Catherine Button indicated that Block Earner's income products cannot be considered investments or financial products because users lend cryptocurrency under fixed terms to receive interest payments, without pooling funds for further returns. The terms and conditions frame it as a loan, and users do not have exposure to anything outside the company's business, only the agreed-upon interest rate.

ASIC, the regulatory body that initially brought the case, has been ordered by the court to pay legal costs, including appeal costs. In a press release on April 22, ASIC stated that it is "considering the decision."

James Coombes, Block Earner's Chief Commercial Officer, told Cointelegraph that the court's ruling clarifies that crypto assets should not be treated differently from other asset classes under existing laws.

He stated, "Our product is simply defined as customers lending their assets to us for a fixed return; customers do not share in the profits of the asset pool, so there is no managed investment scheme."

"Even if it involves crypto assets, this simple definition should not change, and I believe this case lays the groundwork for ambitious brands in Australia."

An ASIC spokesperson declined to comment further.

Earner Products Will Not Return

Despite winning in court, Block Earner has stated that it will not reinstate its Earner products, which were discontinued at the start of the legal proceedings. However, Coombes noted, "Crypto-backed loan products remain the core focus of the company."

"The future regulatory landscape is not easy, and we empathize with that," Coombes added. "We hope to bring about positive change through collaboration."

ASIC initiated civil legal proceedings in November 2022, arguing that Block Earner needed an Australian financial services license to offer its three cryptocurrency-related fixed income products.

In February 2024, an Australian court preliminarily ruled that the fintech company needed a financial services license to operate its crypto income products.

A subsequent ruling in June 2024 exempted Block Earner from any financial penalties, as it "acted honestly" and sought legal advice before launching its products, which ASIC has appealed.

Related: Lawyers hope Hashflare co-founder will "voluntarily depart" after sentencing.

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